Do you remember how crazy ZEC was? It shot straight from over $50 to nearly $750, once being the strongest asset in the crypto market. But now it has fallen to over $300, with its market cap halved from nearly $10 billion to just over $5 billion. The story behind this is actually quite worth pondering.

Last Q4, the privacy topic suddenly heated up. A16z's report showed a surge in privacy-related searches, and big influencers like Arthur Hayes and Naval Ravikant started promoting the concept of "encrypted Bitcoin." Institutions also followed suit, with Cypherpunk Technologies investing $18 million, Winklevoss Capital adding over $58 million, and Grayscale reactivating the Zcash trust. Plus, the November halving event, which reduced block rewards from 3.125 to 1.5625, along with the ZIP-1015 12% lock-up mechanism, all seemed to align as catalysts.

But here’s the key point. When the price was still high, the ecosystem’s TVL was already quietly slipping away. At its peak, Zcash DeFi had over $30 million locked, but within weeks, it dropped below $2 million. The price was still rising, but money was fleeing. This dislocation is often a sign that the market is preparing for the next wave.

Then came January. The entire leadership of Electric Coin Company resigned collectively due to governance conflicts with the Zcash Bootstrap Foundation. The market reacted quickly, with the price dropping 14% to 25% instantly. But a detail most people didn’t notice: the developers didn’t actually give up on Zcash; they just left ECC to establish an independent company to continue developing privacy tools, including the Zashi wallet. The protocol itself never stopped.

Looking back at this timeline, it’s almost too perfect. Privacy narrative returns, institutional funds establish a bottom, halving supply tightens, derivatives launch with leverage, then an 8x rally in two months. Then the reverse cycle begins—TVL disappears, governance turmoil surfaces, momentum wanes. The $10 billion market cap evaporated by over $7 billion. This is the cyclical nature of crypto markets: catalysts, capital, expectations, then everything reverses.